Congress Approves $1.2T Investment in Clean Energy, Climate Resilience, Natural Resources

The Infrastructure Investment and Jobs Act (“IIJA”), a $1.2 trillion investment in projects in all 50 states, is expected to be signed into law this week or next. A good portion of that investment is in modernizing the energy grid, reducing reliance on carbon-intensive energy sources, and protecting the areas of the country most vulnerable to climate change and extreme weather events. Congress debated whether to pursue the carrot or stick approach to achieving these goals. Ultimately, it went with a giant pile of carrots and hardly any sticks at all.

This article provides a top-level summary of notable investments from the IIJA. In future issues, Marten Law LLP will highlight in detail how the IIJA will impact a variety of industries, including energy producers, investors, forest and agricultural companies, technology innovators and many others.

Clean Energy, Efficiency, and Electrical Grid Upgrades

Approximately $65 billion of the IIJA is directed towards programs relating to clean energy, building energy efficiency, and electrical grid upgrades.

Clean Energy

The investments in clean energy total over $35 billion and are spread across a variety of sectors—including batteries, carbon capture, hydrogen, nuclear, and hydropower,. Of that amount, $7.7 billion is allocated to clean energy supply chains, aimed at ensuring minerals and processes in battery technology are secure given projected increases in demand for energy storage. Carbon capture and removal programs are slated to receive over $8 billion, including $3.5 billion authorized for the development of four large-scale, regional direct air capture hubs. Another $500 million is authorized for a clean hydrogen manufacturing and recycling program. The IIJA also allots $6 billion to create a civil nuclear credit program to evaluate nuclear reactors which are scheduled for closure. Finally, the IIJA includes approximately $800 million for maintaining and improving hydroelectric facilities.

Building Energy Efficiency

Funds allocated towards energy efficiency are spread across the residential, commercial, and industrial sectors. There is $250 million to audit, upgrade, and retrofit residential and commercial buildings through the State Energy Program. Another $500 million is directed towards a grant program for public schools. The IIJA also includes $3.5 billion for a Weatherization Assistance Program for low-income households.

Grid Upgrades

Upgrades to the nation’s electrical grid are aimed at both flexibility improvements to adapt to renewable sources and modernizing the grid to improve resilience. Grid investments total over $27 billion, which includes $5 billion directed towards a grant program to reduce the impacts of natural disasters. An additional $5 billion is allocated for electric grid reliability research and development. The IIJA also includes $3 billion to improve grid flexibility to accommodate intermittent power sources and increase reallocation capabilities during outages. There is $2.5 billion to establish a revolving loan fund for the Department of Energy to act as an “anchor-tenant” in the development or upgrade of transmission lines. Finally, the IIJA increases the Bonneville Power Administration’s borrowing authority by $10 billion to finance the next generation of hydroelectric facilities on the Pacific Northwest’s Columbia River.

Climate Resilience

Over $47 billion is allocated towards so-called climate resilience projects. These funds are primarily aimed at addressing three types of climate-fueled disasters which have grabbed headlines in recent years: fires, floods, and drought.

Wildfire Management

After several historic fire seasons, Congress sought to use the IIJA to invest in wildfire prevention and management. The IIJA allocates $3.4 billion in funding for wildfire risk reduction, including grants for community wildfire defense, mechanical thinning, prescribed burns, and installation of fuel breaks. It also provides $2.3 billion for ecosystem restoration projects. Finally, the IIJA authorizes $250 million for the Forest Service’s Legacy Road and Trail Program, a program that restores fish passage in streams and decommissions temporary or unauthorized roads.

Flood Mitigation

The IIJA authorizes over $12 billion to combat flooding in at-risk communities. This includes $7 billion to begin chipping away at the backlog of Army Corps of Engineers projects which have yet to receive funding, largely focused on risk management and aquatic ecosystem restoration projects. Another $1.5 billion is allocated towards various NOAA projects to expand natural ecosystems, prevent shoreline erosion, and to create new flood mapping and modeling programs. Finally, the IIJA includes $500 million for the STORM Act to provide loans and grants to at-risk local communities and another $3.5 billion for the FEMA Flood Mitigation Assistance program to assist state and local governments with reducing flood risk to homes and businesses.

Combatting Drought

Droughts are primarily addressed in the IIJA through $2.2 billion for the Aging Infrastructure Account. This money will allow the Bureau of Reclamation to fund water infrastructure upgrades and repairs. Another $500 million is allocated to the Western Area Power Administration to replenish reserve funds which have been depleted in recent years as drought conditions have impacted hydroelectric output. Finally, the IIJA includes $618 million for the USDA’s watershed programs—which are aimed at protecting and restoring watersheds in drought-prone Western and Midwestern states.

Legacy Pollution and Water Infrastructure

The IIJA also funds contaminated site remediation. Congress provided $21 billion to clean up PFAS and other chemicals, reclaim abandoned mine lands, and plug orphan oil and gas wells.

Superfund

The IIJA replenishes the Superfund for the first time in almost 20 years. The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), also known as the “Superfund” law, authorized a fee on certain chemical companies when it was enacted more than 40 years ago to provide funding for environmental cleanups. The fees expired in 1995, and the Superfund ran out of funding in 2003. The IIJA reinstates fees on certain chemical beginning on July 1, 2022, and sunsetting on December 31, 2031. The Act also makes $3.5 billion available for 5 years for investigation and remediation of Superfund sites.

Brownfields

EPA’s Brownfields program provides grants and technical assistance for Tribes, states, and communities to assess, clean, and reuse contaminated properties. Congress provided $1.5 billion equally distributed over 5 years for State and Tribal Assistance Grants. All state cost share requirements for this section have been waived. The fund allocation includes $1.2 billion for Brownfields competitive grants. The remaining $300 million are dedicated to categorical grants to support development of state-led Brownfield redevelopments.

Water Infrastructure

The IIJA allocates more than $66 billion for drinking water infrastructure. Those funds include $10 billion in grants for states sand water utilities to treat Per- and Polyfluoroalkyl Substances (PFAS) contamination and $15 billion in the Drinking Water State Revolving Funds to be directed toward lead service line replacement. A future Marten Law Newsletter article will address the PFAS investment in detail. Congress also made a $43.4 billion commitment for the State Revolving Loan Funds used to help water suppliers finance water infrastructure projects. The Bureau of Reclamation will receive $8.3 billion to address storage, recycling, reuse, and drought conditions in the West. The IIJA also establishes a Clean Water Infrastructure Resiliency and Sustainability Program at EPA to provide grants to owners or operators of publicly-owned treatment works to address climate change. Congress also allocated $3.5 billion or water infrastructure in Tribal communities through the Indian Health Service Sanitation Facilities Construction program, in addition to funds to complete all currently authorized Indian Water Rights Settlements.

For more information on the IIJA, please contact Jack Ross and James Pollack.

The authors wish to thank Brad Marten and Lawson Fite for their contributions to this article.